PERFORMANCE MANAGEMENT
TOPIC 5
1: FOCAL ARTICLE: Why is Performance Management Broken? – Pulakos & O’Leary
The formula for effective PM remains elusive.
- Research has focused on understanding & improving PM through management processes, tools…
- As a result: many attempts to improve it, recommendations to evaluate results, competencies, behaviors,
contributions oftentimes, new PM practices are adopted without sufficient consideration of what it takes
to implement them effectively / how they fit in organizational culture
o Vicious cycles of organizations reinventing PM systems every few years suffer implementation
failures reinvent the system again …
- PM = Achilles Heel of human capital management, yet essential to achieve work through others:
When PM is done effectively When done poorly
- Communicates what’s important to the organization; - Fails to achieve these benefits;
- Drives employees to achieve results; - Undermines employee confidence &
- Implements organization’s strategy. damages relationships.
- Significant part of the problem: PM has been reduced to prescribed steps within formal administrative
systems, the results of which are highly scrutinized, that are disconnected from the day-to-day activities that
determine PM effectiveness (e.g., communicating clear work expectations, setting short-term objectives &
deadlines, providing continual guidance).
o PM implementations tend to focus on rolling out formal administrative processes & tools rather than
training managers & employees how to engage in effective PM behavior.
o The informal process of engaging in setting expectations, providing feedback, helping staff solve
problems, determines PM effectiveness.
There should be a shift in the focus of PM interventions in 2 different ways:
- Unbridled implementation of PM practices should cease
o Has not been shown to improve PM effectiveness;
o When impractical to sustain, can cause negative consequences, e.g., eroded credibility; increasingly
negative attitudes towards PM.
- Devote more attention to improving manager-employee communication & aspects of the manager-
employee relationship that are foundational for effective PM
o Tools can facilitate PM but not yield PM effectiveness, as this can only occur between people.
What it takes to implement 4 popular PM practices:
1 – Cascade organizational goals to individual employees
- Principle: cascade organizational goals from the top & refine them through each level until they reach
individual employees.
Proponents advocate Reality
- Each level supports goals relevant to the - High-level organizational goals are often lofty & broad
prior higher level; causes confusion & frustration when managers attempt to
- Help everyone understand how work is cascade them;
related across organizational units & - Time-consuming & difficult to cascade goals, especially the
levels; first time;
- Align the work of individuals & units - Considerable consultant / HR time is needed to facilitate
with the organization’s direction & the cascade;
priorities. - If employees do not attach high value to cascaded goals,
process will be frustrated & yield negative attitudes;
- Advantages associated with cascading goals can be
achieved through more informal & simpler communication
processes.
2 – Set SMART performance goals
- SMART = specific; measurable; attainable; relevant; time-bound. Popular to develop these goals at the
beginning of the rating cycle.
, o Jobs that lend themselves best for SMART goals have relatively static performance requirements &
defined productivity metrics.
Proponents advocate Reality
- Provide customized performance - Writing good performance objectives is difficult:
expectations & criteria based on the training & facilitation are needed, examples help;
employee’s specific job; - Ensuring objectives are fair for similarly situated
- Managers & employees collaboratively employees requires review & monitoring across
identify performance objectives specific to employees;
the employee’s job; - Some jobs are too volatile for objectives to be
- Use of objectives communicates & clarifies practical;
what employees are accountable for - Individual objectives do not work well when the work
delivering. is team based / dependent on factors outside the
- Drive employees to achieve important employee’s control;
results; - Objectives must be translated into specific work plans
- Remove unfair subjectivity from the & deliverables in which managers have a significant &
evaluation process. ongoing role;
- Difficulties, complexities, time associated with
objectives-based system yield high implementation
risk;
- Advantages of setting formal goals can be achieved
through more informal discussion.
3 – Rating competencies
- Principle: reflect how an employee accomplishes work by rating competencies, e.g., communication, critical
thinking.
- Formal evaluation using rating standards is often needed for administrative purposes.
- Rating calibration = managers within a unit discuss their ratings of employees to identify where they may
have inadvertently applied different standards or rated too leniently. Makes managers more accountable.
- Using rating standards to evaluate employee behavior:
Proponents advocate Reality
- Use of predefined, job-relevant - Significant outside forces in organizations that yield inaccurate
rating standards to rate employee ratings;
behavior; - Managers interpret rating standards from their own viewpoints
- Behavioral standards facilitate & apply them differently;
communicating expectations & - Obtaining more accurate & consistent ratings from managers
transparency; requires calibration & monitoring;
- Rating standards improve the - Failure to calibrate ratings can result in use of idiosyncratic
consistency & accuracy of ratings standards across managers, unfair treatment of employees, and
across managers. consequential dissatisfaction with the system.
4 – Gather performance information from multiple sources
- Multisource assessment enables more complete assessment as managers, peers, direct reports, and
customers see different aspects of a person’s performance.
- Collecting performance information from multiple sources can be done informally / formally:
o Informally:
Managers simply ask those with different relationships to the employee for feedback
o Formally:
With the exception of supervisors, multisource ratings are usually gathered from at least 3
raters per source to protect anonymity of individual raters & increase reliability and
accuracy.
Automated tools are needed to efficiently manage the process: collect, analyze, and
properly integrate ratings from different sources.
Proponents advocate Reality
- Provides more complete picture - Collecting multisource information formally requires automated
of the employee’s performance; tools to handle more complex data collection & reporting
requirements;
TOPIC 5
1: FOCAL ARTICLE: Why is Performance Management Broken? – Pulakos & O’Leary
The formula for effective PM remains elusive.
- Research has focused on understanding & improving PM through management processes, tools…
- As a result: many attempts to improve it, recommendations to evaluate results, competencies, behaviors,
contributions oftentimes, new PM practices are adopted without sufficient consideration of what it takes
to implement them effectively / how they fit in organizational culture
o Vicious cycles of organizations reinventing PM systems every few years suffer implementation
failures reinvent the system again …
- PM = Achilles Heel of human capital management, yet essential to achieve work through others:
When PM is done effectively When done poorly
- Communicates what’s important to the organization; - Fails to achieve these benefits;
- Drives employees to achieve results; - Undermines employee confidence &
- Implements organization’s strategy. damages relationships.
- Significant part of the problem: PM has been reduced to prescribed steps within formal administrative
systems, the results of which are highly scrutinized, that are disconnected from the day-to-day activities that
determine PM effectiveness (e.g., communicating clear work expectations, setting short-term objectives &
deadlines, providing continual guidance).
o PM implementations tend to focus on rolling out formal administrative processes & tools rather than
training managers & employees how to engage in effective PM behavior.
o The informal process of engaging in setting expectations, providing feedback, helping staff solve
problems, determines PM effectiveness.
There should be a shift in the focus of PM interventions in 2 different ways:
- Unbridled implementation of PM practices should cease
o Has not been shown to improve PM effectiveness;
o When impractical to sustain, can cause negative consequences, e.g., eroded credibility; increasingly
negative attitudes towards PM.
- Devote more attention to improving manager-employee communication & aspects of the manager-
employee relationship that are foundational for effective PM
o Tools can facilitate PM but not yield PM effectiveness, as this can only occur between people.
What it takes to implement 4 popular PM practices:
1 – Cascade organizational goals to individual employees
- Principle: cascade organizational goals from the top & refine them through each level until they reach
individual employees.
Proponents advocate Reality
- Each level supports goals relevant to the - High-level organizational goals are often lofty & broad
prior higher level; causes confusion & frustration when managers attempt to
- Help everyone understand how work is cascade them;
related across organizational units & - Time-consuming & difficult to cascade goals, especially the
levels; first time;
- Align the work of individuals & units - Considerable consultant / HR time is needed to facilitate
with the organization’s direction & the cascade;
priorities. - If employees do not attach high value to cascaded goals,
process will be frustrated & yield negative attitudes;
- Advantages associated with cascading goals can be
achieved through more informal & simpler communication
processes.
2 – Set SMART performance goals
- SMART = specific; measurable; attainable; relevant; time-bound. Popular to develop these goals at the
beginning of the rating cycle.
, o Jobs that lend themselves best for SMART goals have relatively static performance requirements &
defined productivity metrics.
Proponents advocate Reality
- Provide customized performance - Writing good performance objectives is difficult:
expectations & criteria based on the training & facilitation are needed, examples help;
employee’s specific job; - Ensuring objectives are fair for similarly situated
- Managers & employees collaboratively employees requires review & monitoring across
identify performance objectives specific to employees;
the employee’s job; - Some jobs are too volatile for objectives to be
- Use of objectives communicates & clarifies practical;
what employees are accountable for - Individual objectives do not work well when the work
delivering. is team based / dependent on factors outside the
- Drive employees to achieve important employee’s control;
results; - Objectives must be translated into specific work plans
- Remove unfair subjectivity from the & deliverables in which managers have a significant &
evaluation process. ongoing role;
- Difficulties, complexities, time associated with
objectives-based system yield high implementation
risk;
- Advantages of setting formal goals can be achieved
through more informal discussion.
3 – Rating competencies
- Principle: reflect how an employee accomplishes work by rating competencies, e.g., communication, critical
thinking.
- Formal evaluation using rating standards is often needed for administrative purposes.
- Rating calibration = managers within a unit discuss their ratings of employees to identify where they may
have inadvertently applied different standards or rated too leniently. Makes managers more accountable.
- Using rating standards to evaluate employee behavior:
Proponents advocate Reality
- Use of predefined, job-relevant - Significant outside forces in organizations that yield inaccurate
rating standards to rate employee ratings;
behavior; - Managers interpret rating standards from their own viewpoints
- Behavioral standards facilitate & apply them differently;
communicating expectations & - Obtaining more accurate & consistent ratings from managers
transparency; requires calibration & monitoring;
- Rating standards improve the - Failure to calibrate ratings can result in use of idiosyncratic
consistency & accuracy of ratings standards across managers, unfair treatment of employees, and
across managers. consequential dissatisfaction with the system.
4 – Gather performance information from multiple sources
- Multisource assessment enables more complete assessment as managers, peers, direct reports, and
customers see different aspects of a person’s performance.
- Collecting performance information from multiple sources can be done informally / formally:
o Informally:
Managers simply ask those with different relationships to the employee for feedback
o Formally:
With the exception of supervisors, multisource ratings are usually gathered from at least 3
raters per source to protect anonymity of individual raters & increase reliability and
accuracy.
Automated tools are needed to efficiently manage the process: collect, analyze, and
properly integrate ratings from different sources.
Proponents advocate Reality
- Provides more complete picture - Collecting multisource information formally requires automated
of the employee’s performance; tools to handle more complex data collection & reporting
requirements;
